Latest / Orthodontic Products Podcast / Why You Should Adopt a Limited Treatment Program
Transcript
- Alison Werner (00:11) Hello and welcome to the Orthodontic Products podcast. I'm your host, Alison Werner. On today's episode, we're gonna talk about why you should adopt a limited treatment program and the scenario that is making that a good option to help with production. And with us to speak to this topic is Oliver Gelles Chief Marketing Officer at OrthoFi, the software and service solution that provides patient onboarding and includes insurance, patient billing, and collection services. Oliver has over 20 years of experience in the orthodontic industry and is a frequent speaker on patient acquisition. Oliver, thank you for joining me again. Oliver Gelles (00:43) Thanks, Alison. Great to be here. Alison Werner (00:45) So as I kind of alluded there in the intro, we're going to kind of talk about like the what's going on in the industry right now. So what are the trends you guys are seeing? Oliver Gelles (00:55) You know, last few years have been unprecedented. And I'm not just talking about the COVID and COVID recovery. Those were unprecedented in sort of, you know, symmetrical ways that we all know. You know, 22 was what I would consider a correction from what was a record 21 and a half percent growth year in 2021. But the last two years, right, were one and a half in... Alison Werner (00:57) Mm Oliver Gelles (01:20) one and half years into a sustained decline of starts. This year is tracking again to about three and a half percent drop in starts. And so, you know, it's definitely spooking some practices and some businesses out there. But what's important is really root causing that drop. And what we've been seeing very consistently and clearly, if you look at Gaidge data and even OrthoFi data to a lesser extent, because we tend to manage that stuff a little bit more effectively, that the cause of the drop in starts is very acutely around the adult aligner starts. So when you look at the overall drop in starts of three and a half percent year to date, but then you look at the trend in adult aligner starts, we're seeing about a 17 % year to date. Alison Werner (01:48) you Okay. Oliver Gelles (02:11) year -over -year drop in starts for adult aligners and about 19 % drop in aligner limited treatment for adults. And so when you consider the fact that adult treatment is roughly 20 to 25 % of the typical practices start volume and you do 17, 18, 19 % of 20%, that pretty much comes out to the figure of 3 .5%. And so... Alison Werner (02:28) Mm -hmm. Yeah. Oliver Gelles (02:38) when you ask the question, why is that acute drop happening in that segment? The answer should not be for anyone on this call, for anyone listening to this podcast, should not be that all of a sudden adults didn't want treatment anymore because the reality is that the adult exam trend, which is more direct and indicator of demand, is about flat year over year. Alison Werner (02:47) You Mm huh. Oliver Gelles (03:04) And you can also exclude the factor of all of a sudden aligners became unpopular. I don't think anyone would say with a straight face that that's the case. And so the only unique reason, the only unique factor that we apply with when we present adult aligners versus any other appliances or to the other segment is that for whatever reason, orthodontic practices are requiring the full lab fee as the minimum down. Alison Werner (03:12) Right. Oliver Gelles (03:33) And so the minimum down being $1 ,500 is a significant departure from what they do with the rest of their cases. And they are presenting that to a population that thinks of this treatment more whimsically. It is not a rite of passage for adults. It is a rite of passage for kids. And so it is an if. It's not just when with whom. And we have the economic tightness where Alison Werner (03:33) okay. Mm -hmm. Mm -hmm. Right? Oliver Gelles (03:57) It's always been the case that only four out of 10 American adults have $1 ,000 or more to put towards an unplanned expense. And in this economy, it is likely even less than that. And so we're doing sales prevention at the very, very wrong time. And so that's really what's causing that 3 .5 % drop. So we've got to address that and fix it and get better and more appealing to adults to get back Alison Werner (04:03) Mm Mm. Oliver Gelles (04:27) the growth that we've lost. Alison Werner (04:28) Okay, so what are, is there a strategy that you recommend? Because I know we've talked and you've mentioned adopting a limited treatment program. So can you talk a little bit about that? Oliver Gelles (04:38) Yeah, absolutely. So in addition to open choice and things that I talk about all the time, things that you can read in the book, level the curve and you know, all that stuff, which is really more about how to get your traditional full aligner starts going again and why you should abandon that strategy of asking for the full lab fee as a minimum down. That's a whole other conversation to have, but to offset the economic impact where people now maybe are not going to. Alison Werner (04:43) Mm -hmm. Mm -hmm. Yeah. Oliver Gelles (05:07) say yes to a $5500 or $6000 case, we need to have levels of service. And so it will help to offset the drop in volume by practices now officially putting this into their products portfolio. And what I find when I talk to practices about this, there's generally two branches of objections. Alison Werner (05:11) Mm -hmm. Oliver Gelles (05:33) The first one is more of a clinical objection, right? That they have their, you know, clinical ethical objection of, you know, I don't feel that clinical, you know, that the limited treatment is clinically ethical. It's not what they need. They need a full correction to ensure great function. And I'm a hundred percent understanding of that and respectful of that. But at the same time, what practices need to understand is that those consumers are not Alison Werner (05:56) Mm. Oliver Gelles (06:03) ever going to consider full treatment and if you don't give them an option they are more likely if they are motivated to go find a clinician that will do so and it will likely be their dentist who doesn't really understand the implications of that and so what they should ask themselves is ultimately even though it may be compromised wouldn't it still be better and a better outcome and a healthier outcome if I perform limited treatment versus them getting it from an Alison Werner (06:17) Hmm, okay. Oliver Gelles (06:33) an uninitiated outlet that will simply give them a cheap treatment. And so I really try to impress that. I get it. I've been in orthodontics now for 20 years. I worked on the clinical side for 10 of those years. So I have a full appreciation for that objection, but we need to think differently today. The second objection that I get about limited treatment is that it is not profitable. And the fallacy that drives that perception is the way that they calculate the numbers. So I'm definitely a math guy. And there are some numbers that are misused by the typical practice that they have learned from working with a consultant, not saying that the consultants are misinforming them. They're just taking a number out of context. So one of the key metrics that a lot of consultants help clock for practices is the average cost per visit. And for the average practice, it's somewhere in that $230 to $250 of cost per visit. And so they do this math of it's going to cost me, let's say, a thousand dollars for the material cost of the actual limited aligner case. And then I don't care how limited it is. I'm still probably going to see them about six times and they multiply that 230 or 250 times six added to the thousand. All of a sudden they're making less than a thousand dollars of the case. And percentage wise, they say, you know, that's not really profitable for me. I can't make money at it. The fallacy is that All of the volume that we are talking about introducing into your practice with limited treatment is fully incremental. And so inside of the orthodontic P &L, one of the magical things and what makes orthodontic practice so profitable is that 70 % of their cost base is fixed. And so when you are able to add 15, 20, 30 limited cases in a year that you weren't ever doing before, it doesn't actually cost you any more rent, any more lights, any more water. Even your team has open capacity to do it because of how easy the chair time is with these things. And so you actually don't apply the full 230 to 250. In fact, it's all incremental. So really the only additional cost is about 15 to 20 % because it is the material costs and then it's just the merchant fee of, you know, whatever they were going to pay you with the credit card. so out of that 3 ,500, there's probably only a total cost of about $500 to $750, depending on what technology you're using, right? You know, to do your limited treatment aligners. And so if you do that math, you actually end up at about $2 ,500 on the low end in terms of overall profit, which is about what you make on your current cases. And so actually, it is quite profitable if you and your finance person, if you have one, not talking about CPAs, sorry, CPAs, but if you work with a finance person that understands these dynamics, they can help you to, you know, craft that strategy. And so it is actually very profitable. Does that make sense, Alison Alison Werner (09:46) So you mentioned there that, you know, sometimes you hear objections. So is there something specific that's coming up and do you have any recommendations for how to address that issue? Oliver Gelles (09:57) Yeah, I mean, aside from the two main ones that we talked about, the other one is how do I present limited treatment in a way that doesn't undercut my ability to sell my full cases, which is what I really want to do, right? I certainly don't want anyone that is listening to this podcast to turn a $5 ,500 case into a $3 ,500 limited case, right? So there's two really two things that I would advocate. Number one is it's all in the way that you present things. I still want everyone here to lead with their recommended clinical treatment. So I would always load both options however you guys present fees. Obviously in OrthoFi you can create two parallel options that you can easily toggle between and send home. If you don't have systems like that however you're going to build that but have them both up and ready. But lead with the recommended full treatment and give that a minute for them to marinate on that. If you then sense though that this range is outside of their comfort zone and well outside of it, then you are ready to present another option right behind it and not lose the momentum of that sale, right? So there's just the mechanics of how to present it. There's also additional things I would add to that. Just letting them know that, for example, a lot of patients that opt for limited treatment at first then realize that they want the full treatment later. Just let them know if you then decide to upgrade it probably will be a little bit more expensive to do it that way just because there will be some change in the treatment plan that will cost money that they need to pass on. So it would be better if they feel like there's any chance that they're going to want full treatment to do it today. So there are little subtle influencing tactics that can keep the ones that would have been full stay in full and really then optimize the ability to get that limited treatment. But I've got something even more unconventional, and I'm going to challenge everyone who's listening to think very differently, because the truth is, this strategy works when you are able to expand into a white space that you're not tapping into. And white space sounds like a really, you know, funny marketing term and all that. But the truth is, everyone who's listening already has a white space that they're not tapping into. Alison Werner (11:56) Okay. Oliver Gelles (12:19) and it's in your practice today. So for the average practice, you probably have five to 600 eligible patients that you are not talking to about treatment, and those are your parents. And so now that said, they're not beaching themselves, they're not coming and asking about treatment. You've got to do something to spark interest from them. And this is not about hard selling necessarily, and it's not about hard marketing. It's about education. And so here is a tactic that's proven. I've worked this with some partners of ours that we work with at Voxel and they've have a proven formula with great case studies showing how effective this is. And again, everyone's got the equipment in their practice. So what I would recommend to everybody, try this for one month and then see what happens. But as a promotional offering just for education, I would offer to scan every parent of every patient that you have. just to show them a digital version of their smile so that they can see the function and look of their smile up close. They can spin it and look at it and send it home and let them think about it. And what's amazing is when they see it large, when they see the things that they've noticed in the mirror, it's kind of the zoom effect, but on steroids, it's amazing what that generates in terms of the next question. It's the obvious next question that you don't even have to ask them. They will ask themselves. And what we found is when practices did that, around 20 % of the people that were scanned raised their hand and at least asked about treatment. You then have to go and convert them. But imagine if 20 % of those five to 600 raised their hand and said, hey, I might be interested in treatment. What could I do about this? And if you were able to even convert half of those, think about how many more starts that is. in your practice that would be completely incremental and that would ensure that limited treatment is not a drag but in fact is a huge add to your practice. Alison Werner (14:25) Yeah. Well, it's funny because I've actually talked to, think probably about two orthodontists in the last year who have mentioned that they do that with their child exams. And I know it was something they were very proud to have implemented. So it sounds like it's a great way to tap in, you know, an unused mark or an unused section of people, you know. Yeah. Yeah. Yeah. Oliver Gelles (14:46) It takes some choreography. I'm not going to lie. The team's going to look at you funny. You know, it's going to be an extra to do until you guys start to prove out how effective it can be at driving the business. It is going to, you know, it's going to feel like an ask for the team. But the cool thing is the scanning technology today and the simulation technology is super easy, super fast. You know, getting a scan today takes a couple, three minutes. Alison Werner (14:56) Mm -hmm. Oliver Gelles (15:09) And so if everyone really gets on the same page that this is a business building strategy, it doesn't have to be this, you know, exhaustive thing. Alison Werner (15:21) Exactly. Well, I know that this strategy is part of an ebook series that you at OrthoFi have released, and it's three strategies to increase your production starts. And it specifically addresses the fact that this is a down, we're on a downward trend right now. So can you talk a little bit about the ebook as a whole? Oliver Gelles (15:41) Yeah, absolutely. So, you know, we've seen this coming and there are elements of it that are self -inflicted that I've already talked about, right? But then there are other elements that are economy driven and none of us control fiscal policy. None of us can increase or decrease the interest rate. We can't affect those things. And so those things that are driving fewer adults in particular to pick up the phone and call in for treatment. Alison Werner (15:57) Yeah. Oliver Gelles (16:06) you know, we can't control that. And so the way that we can counter it though, is to increase the production per start. If you're to do fewer starts, if you can increase production per start on the ones that do start, that's a way for you to offset and possibly even over offset the trend in your production. And so in the ebook, we talk about three main pillars of strategies that you can employ to increase your production, even with lower starts. The first one is increasing your fees. There are a few different flavors of that. You can obviously increase your overall fee schedule. You can simplify your fee schedule. You can have strategies to decrease discounting and actually shift those funds more to your patient or your team incentive. We found that the team incentive dollar for dollar actually three X ROI. versus actual dollar promotion to the patient. So when you go to discount to a patient, for example, the amount that you need to discount to actually move the needle from a no to a yes is somewhere in the 200 to $250 range. But if you are able to increase your team incentives to drive, for example, same day starts and put $50 per same day start into a kiddie, that is highly motivating to your team. It adds up to real dollars and they'll do all the little things to actually do pre -suasion better, persuasion better, follow -up better, that translate to real results and real change. So it's that 3X multiplier of that ROI, and that's that increasing fees. And the other two are really more around insurance, and they're sort of mirror images of each other. The first one is a lot of practices, especially the larger ones or group ones, tend to fall into the trap of thinking that they need to be a network with every major carrier. to drive volume of case starts. And what we found is, you through looking at the data and analyzing it, is that in most cases, the impact of being in network is actually not material. And so the only difference, you know, with practices that are in network versus out of network is that the out of network ones have about a $500 higher fee. So if you are in an area that does not have a dominant employer, right? So, you know, Honestly though, if you were in Bentonville, Arkansas, you probably should be in network with the Walmart plan. If you were in Orlando, you should probably be in the Disney plan. But unless you are in an area with a dominant employer, you should consider paring down your network participation to increase your fees and eliminate some of those discounts. And we have all kinds of case studies in the ebook that actually show the real results that we've tracked of practices that we've helped and collaborated with to do this. And it's again, very meaningful again about Alison Werner (18:31) Okay. Oliver Gelles (18:54) three, four, $500 increase from doing that. And then the last one is really making sense of the in -network discount. So if in fact you do need to be in network with a number of carriers because of whatever reason locally, there are strategies that most practices don't fully know or they can't scale it or it's not sustainable or they can't keep up with it that in terms of how to work your claims. how to submit and unbundle treatment codes from your overall treatment to chip at and chip away at the discount and increase your allowable charge. And again, what we've seen is about 350 to $450 per case on in -network cases can be offset, meaning increase the total allowable fee by that amount. And so what that blends out to is about $200 per case across the whole average of the practice. That's the equivalent of about 4 to 5 % increase in production just off of that. And the cool thing is, is that all of these increases are really on price. And so they have no cost related to them. So those drop straight to the bottom line. So if I'm able to increase your fees by $500 by eliminating in a network discount, that entire $500 drops straight to the bottom line. So it can be incredibly impactful financially. And so it moves the needle quite well. Alison Werner (20:28) One follow -up question I had for you on that optimization is, are there any tools available to help them do that? Oliver Gelles (20:36) It's, know, insurance companies are not easy to work with. And so if you don't have OrthoFi I would definitely be calling Tina Byrne. She is the foremost expert and consultant on all things insurance. And so if you have never worked with Tina, I would highly recommend at least speaking with her, if not working with her. That said, we have partnered with Tina to build a software module inside of OrthoFi that's launching sometime in the next few weeks. that basically turns this entire insurance optimization into an intuitive workflow where we basically know how to do this and you just click through it and we basically help you to eliminate and minimize the discount on these in -network claims. And so we make it super easy for anyone in the office to understand they don't need to be an insurance Jedi. And so it's super easy to implement. Alison Werner (21:32) Great. Alison Werner (21:33) Okay, so where can people get access to this ebook? Oliver Gelles (21:37) So if you go to startmoresmiles .com slash ebook, that will take you to the page that tells you everything about the ebook and it will give you a form, quick form to fill out to download the ebook and then yeah, and then you'll have it, read it at will and we love to hear feedback. that's the other thing is, this came from some blogs that I wrote over the last few months. and we sort of collated it into an ebook, but I always love to hear what people think about this. Alison Werner (22:09) Well, great. Thank you so much, Oliver. It's been a pleasure to have you again and look forward to talking to you again in the future. Thank you. Oliver Gelles (22:17) Thanks, Alison.